Post by blueneck on May 11, 2007 17:22:17 GMT -6
Middle class living on the edge?
Could your family absorb the financial strain of a job loss or medical emergency? A Democrat-funded think tank says most families' economic risks are growing.
By Debora Vrana
The middle class today is less prepared for an economic emergency, such as losing a job or visiting an emergency room, than at any time since the late 1970s, concludes a new study from a political think tank in Washington, D.C., that's funded by Democrats.
"Middle Class in Turmoil," produced by the Center for American Progress and the Service Employees International Union, mines data from the Federal Reserve, the U.S. Bureau of Labor Statistics, census records and other sources to paint a picture of increasing peril for those in the middle 60% of income distribution, about $18,000 to $88,000.
Despite a growing economy, a rising stock market and stronger corporate earnings that are helping the rich get richer, the middle class in America is caught in an unprecedented squeeze that makes it increasingly unstable, the study's authors say. The financial declines each year since 2001 have been dramatic, they report:
Income for middle-class families has remained stagnant or flat since 2001.
Prices for big-ticket items -- housing, health care, college education and transportation -- have skyrocketed, leaving families unable to save.
Middle-class families are borrowing record amounts of money to pay their monthly bills.
"Families are being forced to live beyond their means, just to pay for the basics, such as housing and health care," said Christian Weller, a senior economist for the Center for American Progress, which is headed by John Podesta, a former Clinton-administration chief of staff. "They are not only spending their current income but all their future income."
Would you be able to keep your home for even three months if the family breadwinner became unemployed? Just 28.8% of middle-class families could sustain themselves through a spell of joblessness in 2004, the most recent year for data, compared with 39.2% in 2001, the study says.
Do you have the cash reserves to pay for a medical emergency? With double-digit increases in health-insurance costs for most of this decade, it's no surprise that the number of Americans without insurance rose by 1.3 million last year, up to 46.6 million people, according to the U.S. Census Bureau. The cost of family health insurance is up nearly 90% since 2000, according to the Kaiser Family Foundation, a nonprofit organization. The study says only 22.3% of middle-class families could cope with the $3,013 average cost of a small medical emergency, such as treatment for a broken ankle. That's down from the nearly 35% that could handle such an expense in 2001.
Do you have three months of income put away for a rainy day? Just 18.3% of middle-class families -- those with dual incomes earning from $18,500 to $88,030 -- in 2004 had accumulated wealth equal to three months' worth of income, a drop from the nearly 29% who had such savings in 2001. The number is expected to be even lower now.
"People are incredibly anxious, and families are stressed out. We're seeing too many families passing like ships in the nights in the driveway," said Andy Stern, the head of the Service Employees International Union, the largest and fastest-growing union in the United States. "The rising tide is not raising all boats -- only luxury liners. It's not building the kind of America that any of us want."
To maintain day-to-day consumption, Americans are taking on record amounts of consumer debt, researchers say -- $5.2 trillion since 2001. In June 2006, families took on debt equivalent to 129% of their disposable incomes, a big increase from the 96% in March 2001.
Many homeowners are tapping into the equity in their homes, assuming more debt to pay for escalating energy and health-care costs. Falling home prices could force many of these middle-class families into foreclosure or back into apartments.
Middle-class families are also struggling with the ballooning costs of higher education. The total cost of tuition, fees, and room and board at four-year public colleges has increased 44% in the past four years.
A political football
Expect the financial condition of the middle class to become a critical issue in the November elections, say Democrats, even though Republicans have assailed the new study, arguing the concern is overblown.
"Let's not kid ourselves. The data say we're wealthy. And we're one of the wealthiest nations on Earth," said Tim Kane, a director at the Heritage Foundation, a conservative think tank in Washington, D.C. "You can make a case that there is increased inequality, with the rich getting richer, but I don't think there is increased poverty."
But some economists and others, such as Lou Dobbs, a CNN commentator, are increasingly calling for public-policy action to alleviate financial stresses on the middle class. Dobbs has made the subject a key focus of his on-air commentary, calling the slipping condition of this group nothing less than "class warfare."
One family feeling the pinch is the Andrew Miller family in Charleston, S.C. With a combined income of just less than $100,000 a year, Miller and his wife say they work harder than ever but are no better off than five years ago. They keep a tight rein on spending, but tiny raises that don't match inflation and escalating health costs are leaving them feeling like they are treading water.
"The (medical) co-pays have jumped to $25 for each visit," said Miller, who has two daughters, ages 10 and 8. "Luckily, we have pretty healthy kids. But our premiums are also going up. We're just getting squeezed here."
Sources: Center for American Progress and Service Employees International Union
read more here
articles.moneycentral.msn.com/SavingandDebt/SaveMoney/MiddleClassLivingOnTheEdge.aspx
Could your family absorb the financial strain of a job loss or medical emergency? A Democrat-funded think tank says most families' economic risks are growing.
By Debora Vrana
The middle class today is less prepared for an economic emergency, such as losing a job or visiting an emergency room, than at any time since the late 1970s, concludes a new study from a political think tank in Washington, D.C., that's funded by Democrats.
"Middle Class in Turmoil," produced by the Center for American Progress and the Service Employees International Union, mines data from the Federal Reserve, the U.S. Bureau of Labor Statistics, census records and other sources to paint a picture of increasing peril for those in the middle 60% of income distribution, about $18,000 to $88,000.
Despite a growing economy, a rising stock market and stronger corporate earnings that are helping the rich get richer, the middle class in America is caught in an unprecedented squeeze that makes it increasingly unstable, the study's authors say. The financial declines each year since 2001 have been dramatic, they report:
Income for middle-class families has remained stagnant or flat since 2001.
Prices for big-ticket items -- housing, health care, college education and transportation -- have skyrocketed, leaving families unable to save.
Middle-class families are borrowing record amounts of money to pay their monthly bills.
"Families are being forced to live beyond their means, just to pay for the basics, such as housing and health care," said Christian Weller, a senior economist for the Center for American Progress, which is headed by John Podesta, a former Clinton-administration chief of staff. "They are not only spending their current income but all their future income."
Would you be able to keep your home for even three months if the family breadwinner became unemployed? Just 28.8% of middle-class families could sustain themselves through a spell of joblessness in 2004, the most recent year for data, compared with 39.2% in 2001, the study says.
Do you have the cash reserves to pay for a medical emergency? With double-digit increases in health-insurance costs for most of this decade, it's no surprise that the number of Americans without insurance rose by 1.3 million last year, up to 46.6 million people, according to the U.S. Census Bureau. The cost of family health insurance is up nearly 90% since 2000, according to the Kaiser Family Foundation, a nonprofit organization. The study says only 22.3% of middle-class families could cope with the $3,013 average cost of a small medical emergency, such as treatment for a broken ankle. That's down from the nearly 35% that could handle such an expense in 2001.
Do you have three months of income put away for a rainy day? Just 18.3% of middle-class families -- those with dual incomes earning from $18,500 to $88,030 -- in 2004 had accumulated wealth equal to three months' worth of income, a drop from the nearly 29% who had such savings in 2001. The number is expected to be even lower now.
"People are incredibly anxious, and families are stressed out. We're seeing too many families passing like ships in the nights in the driveway," said Andy Stern, the head of the Service Employees International Union, the largest and fastest-growing union in the United States. "The rising tide is not raising all boats -- only luxury liners. It's not building the kind of America that any of us want."
To maintain day-to-day consumption, Americans are taking on record amounts of consumer debt, researchers say -- $5.2 trillion since 2001. In June 2006, families took on debt equivalent to 129% of their disposable incomes, a big increase from the 96% in March 2001.
Many homeowners are tapping into the equity in their homes, assuming more debt to pay for escalating energy and health-care costs. Falling home prices could force many of these middle-class families into foreclosure or back into apartments.
Middle-class families are also struggling with the ballooning costs of higher education. The total cost of tuition, fees, and room and board at four-year public colleges has increased 44% in the past four years.
A political football
Expect the financial condition of the middle class to become a critical issue in the November elections, say Democrats, even though Republicans have assailed the new study, arguing the concern is overblown.
"Let's not kid ourselves. The data say we're wealthy. And we're one of the wealthiest nations on Earth," said Tim Kane, a director at the Heritage Foundation, a conservative think tank in Washington, D.C. "You can make a case that there is increased inequality, with the rich getting richer, but I don't think there is increased poverty."
But some economists and others, such as Lou Dobbs, a CNN commentator, are increasingly calling for public-policy action to alleviate financial stresses on the middle class. Dobbs has made the subject a key focus of his on-air commentary, calling the slipping condition of this group nothing less than "class warfare."
One family feeling the pinch is the Andrew Miller family in Charleston, S.C. With a combined income of just less than $100,000 a year, Miller and his wife say they work harder than ever but are no better off than five years ago. They keep a tight rein on spending, but tiny raises that don't match inflation and escalating health costs are leaving them feeling like they are treading water.
"The (medical) co-pays have jumped to $25 for each visit," said Miller, who has two daughters, ages 10 and 8. "Luckily, we have pretty healthy kids. But our premiums are also going up. We're just getting squeezed here."
Sources: Center for American Progress and Service Employees International Union
read more here
articles.moneycentral.msn.com/SavingandDebt/SaveMoney/MiddleClassLivingOnTheEdge.aspx